The NSW economy grew by 3.5 per cent in 2015-16, well above its trend rate of 2½ per cent, employment expanded by a robust 3.8 per cent, workforce participation reached a record high and the unemployment rate fell significantly.

Economic performance and outlook table (a)

 

2015-16

2016-17

2017-18

2018-19 & 2019-20

 

Outcome

Forecast

Forecast

Projection

Real state final demand

4.2

3

-

Real gross state product

3.5

3

Employment

3.8

Unemployment rate (b)

5.4

5

5

-

Sydney Consumer Price Index (c)

1.5

2

- through the year to June quarter (c)

0.9

2

-

Wage price index

2.1

Nominal gross state product

4.9

-

(a) Per cent change, year average, unless otherwise indicated.
(b) Year average, per cent.
(c) 2015-16 to 2017-18 include ¼ percentage point contribution from tobacco excise increases.
Source: ABS 5206.0, 5220.0, 6202.0, 6401.0, 6345.0 and NSW Treasury
 

Strong domestic demand continues to be the driving force of the NSW economy as the national transition away from mining investment remains a drag on interstate exports and below-trend global growth weighs on overseas exports of goods, particularly coal volumes.

With growing momentum in 2015-16, the outlook for the NSW economy has firmed since the Budget, with above-trend economic growth in NSW expected to continue over the next two years. Low interest rates, a record housing construction pipeline, solid population growth and a record infrastructure program will drive growth in the near term. Further into the future, more support for growth is expected from a lower exchange rate, non-mining business investment, interstate exports and household consumption.

The outlook for the labour market remains positive. The unemployment rate has fallen by more than expected at the Budget and the recent slowdown in employment growth is expected to be temporary given anticipated above-trend economic growth and forward indicators of job vacancies and hiring intentions. Low inflation and continuing spare capacity in the labour market are expected to constrain wages growth.

Inflation pressures have been held in check by strong retail competition, spare capacity in the labour market, restrained wage growth and the soft global inflationary environment.

The unprecedented $73.2 billion state infrastructure investment planned over the forward estimates will continue to drive economic growth.

NSW is expected to continue to outperform the national economy over the next year.

A detailed economic outlook can be found in Chapter 2 of the 2016-17 Half-Yearly Review.